19 - Economic development in Nigeria

• Industrial development


  Important for poorer countries
• Investment by TNCs


  Helps poorer countries develop
• For thousands of years, nations have traded to generate wealth
• Some countries lack the raw materials they need for industry, like iron ore and copper, or fossil fuels
• LICs which only trade in primary products (raw materials and agricultural produce) do not always receive a good price
• Reasons why primary products achieve low prices

  • Overproduction
  • Import taxes
• Manufactured goods can be sold at higher prices
• Manufacturing companies often make great profits, which governments can tax to help pay for education and health services
• China's development since the 1980s demonstrates how much can be achieved by encouraging industrial development
• Transnational corporations (TNCs)


  Large companies that rely less on exporting and prefer instead to produce goods and services inside the borders of many different countries
• Foreign direct investment (FDI)


  The cash injected into other countries by TNCs
• Reasons why TNCs invest in other countries

  • Reducing transport and import costs
  • Looking for new markets
  • Looking for cheap labour
• Investment from Chinese and Indian companies is helping African LICs to develop
• Large-scale power and transport projects have been funded by international aid in some countries
• How international aid helps development

  • Economic development
  • Social and political development
• Flows of aid from the UK are directed towards Commonwealth countries
• India and China provide aid to LICs across Africa
• International aid


  A gift of money, goods or services to a developing country
• Most international aid is targeted at specific long-term development goals for people in LICs and some NEEs
• Intermediate technology


  Technology that the local community can take ownership of and learn to maintain
• The Afridev hand pump is not very sophisticated, but when more advanced machines break, a specialist engineer is needed
• The Fairtrade system is very important for people in LICs and some NEEs
• The higher price of Fairtrade products means that many shoppers in HICs avoid buying them, especially during times of economic hardship
• During the period between 1960 and 1980, some HICs loaned many LICs and NEEs staggering amounts of money to develop their countries
• The lenders were the World Bank, the International Monetary Fund (IMF), and large commercial banks
• If money is invested wisely, it can generate enough wealth to pay back the loan and help the borrowing country to develop too
• Borrowing led to serious debt crises in many developing countries
• Microfinance loans


  Small loans given to the world's poorest people to help them start small businesses
• protest march supporting debt relief

  
• Lenders


  • World Bank
  • International Monetary Fund (IMF)
  • Large commercial banks
• The World Bank and IMF were established after the Second World War to help re-stabilise the world economy. Both are based in Washington DC, USA.
• During the 1970s, US and UK banks lent large amounts of money to countries in the developing world. Levels of interest on bank loans were very high at the time.
• If money is invested wisely

  It can generate enough wealth to pay back the loan and help the borrowing country to develop too
• In some cases, borrowing led to serious problems.
• After Mobuto's death, the World Bank decided it would be unfair to expect the desperately poor people of DR Congo to pay back the stolen money. DR Congo's debt was 'written off'.
• As a result of pressure from charities and protests, other LICs have been offered debt relief too.
• Debt relief


  Writing off or reducing the amount of debt that a country owes
• Debt relief can also be achieved through 'conservation swaps'. A richer country may agree to write off part of a poorer country's debt if that poorer country agrees to protect its physical environment.
• Microfinance loans


  Small sums of money borrowed by poor people in LICs and NEEs
• The most well-known provider of microloans is the Grameen Bank in Bangladesh. It has lent money to 9 million people, 97 per cent of whom are women.